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 That equity expansion strategy has been honed in the three months
since French-born Virginie Maisonneuve was hired by then-Chief
Executive Mohamed El-Erian — before a high-profile bust-up with
Chief Investment Officer Bill Gross led to El-Erian's departure.
And Maisonneuve has no plans to change tack — despite concern from
investors, and parent Allianz <ALVG.DE>, about the firm's direction
in light of the managerial squabble, and as several of its flagship
bond funds saw billions of dollars leave.
Maisonneuve has not spoken to El-Erian since he left, but she said
boss Gross supported the planned expansion of the firm's equity
unit, whose funds account for just $9.1 billion of Pimco's total
$1.94 trillion in assets under management.
"If you want to be a very large player in the equity market, you
need to have commitment over a very long period of time, and that is
what clients would look for — it's just the way it is," said
Maisonneuve, who joined from Schroders <SDR.L> in January.
"If you look at who has built sizeable platforms in equities, it
takes time, 10-15 years, when people have been at it for 50 years.
So that's just a reality ... I'm not saying we're going to wait 10
years before we do something. My ambition is high and I want to
drive equities to a very sizeable level of assets, but that's going
to take time."
The need for good news in the equity sphere has recently been thrown
into stark relief. Two of Pimco's leading bond funds propped up the
performance charts at the end of the third quarter, data from
Morningstar showed.
By comparison, its equity funds — the oldest of which was only
launched in May 2010 — have done rather better. Its long-short
equity fund, for example, is in the top-quartile of performers
according to Thomson Reuters Lipper data.
Maisonneuve is confident on the outlook for the market and advised
to buy the market on any pullback.
BOUTIQUE BOOST
Maisonneuve said she plans to hire between 10 and 16 people to help
boost her investment staff of around 30, an operational size she
considers "quiet nice if you look at it as a boutique".
Those would be split between some of her team's existing funds,
which consist of a long-short fund, two dividend-focused funds, an
emerging markets fund and a "Pathfinder" fund which invests in
stocks deemed significantly undervalued.
The staff are currently split across London, New York and the home
of Pimco, Newport Beach, California — which Maisonneuve visits
regularly and into which she often dials for a weekly conference
call with her five-strong deputy CIO peer group, all of whom share
El-Erian's duties as part of a global committee.
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While unwilling to put a number on the ultimate size of Pimco's
equity business, or its ratio to the bond side of the asset ledger,
the 27-year veteran of financial markets is clear growth is unlikely
to be got by buying a bulky rival.
"I've been lucky with the M&A experience I've had, but if you look
at the big ones, it's not always clear that it adds value," she
said, preferring instead to bring on "small teams, the same way
Pimco has done it (before)".
That organic growth will also involve creating a range of hybrid
products to make best use of the credit analysis expertise that
exists at the company, and which is already used by several of her
equity funds, she said.
"You can ... think about going up and down the capital structure,
saying: 'I like this company, what do I buy? The bond or the
equity?'. And I think if there's one firm in the world who's going
to be set up to build these hybrid products, it's Pimco."
With lots of resumes landing on her desk, both physically and
electronically — "a lot of people are sending them to the
headhunting firm that we've hired, or directly on my LinkedIn
account" — Maisonneuve is confident of Pimco's allure.
And new hires based in London could well find themselves sharing
fund management duties with the boss, investing in line with several
of her major thematic bets — demographic change, emerging market
growth and the low-carbon economy — using a so-called growth at a
reasonable value strategy.
"My passion is investment," she said, "(but) it won't be mine, it
will be mine and the team; it's always a team game."
(Editing by Pravin Char)
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